RIO DE JANEIRO – Shares in Brazil’s state-run oil company, Petrobras, plummeted yesterday after President Jair Bolsonaro changed the firm’s chief executive, fueling fears he will intervene in energy prices and the economy in general as he eyes re-election.
The company’s ordinary shares dived 20.5% and preferential shares 21.5% on the Sao Paulo stock exchange, which closed down 4.9% overall.
Bolsonaro on Friday appointed army reserve general Joaquim Silva e Luna as president of Petrobras, shortly after saying the firm should not be constantly “surprising people” with price increases.
Under ousted CEO Roberto Castello Branco, Petrobras had increased fuel prices four times so far in 2021, a cumulative rise of nearly 35%.
The increases came as international oil prices, which hit all-time lows last year, returned to pre-coronavirus pandemic levels, pushed higher by output cuts in oil-producing countries and optimism that vaccines against Covid-19 will spur a global economic recovery.
But the price hikes have triggered backlash in Brazil, notably among truck drivers, who vowed a crippling strike.
Brazil, Latin America’s biggest economy, is a top 10 oil producer, with output of 3.67 million barrels per day in 2019.
Petrobras is Brazil’s biggest company, but is only just emerging from twin crises involving financial woes and a massive corruption scandal.
The company has been selling off assets and slashing spending to put its books in order since revelations of its role in a huge bribe-paying scheme exploded in 2014.
Now with the latest stock-market carnage, Petrobras has lost 100.6 billion reais (RM74.4 billion) in market value since Thursday.
The Brazilian real meanwhile fell 1.26% against the dollar.
Shares in state electricity company Eletrobras initially shed 8% before recovering, amid ongoing discussions on privatising Eletrobras. – AFP, February 23, 2021
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